The Benefits of Structuring for Long-Term UK Expatriates Following the Recent Budget
The UK government’s recent budget has introduced changes that may impact long-term UK expatriates who are non-resident. For British expats who have lived abroad for many years, ensuring financial affairs are structured appropriately is more important than ever. While these changes may introduce complexities, they also present opportunities in certain circumstances and highlight the importance of strategic financial planning to enhance asset protection and ensure compliance with tax regulations.
Jersey, as a leading international finance centre, offers a range of trust and corporate structuring solutions that can assist long-term UK expatriates in managing their wealth. However, it is essential to engage with a qualified tax adviser to ensure that any structuring aligns with UK and international tax laws. We can assist by facilitating introductions to experienced tax advisers who can provide the necessary guidance, thereafter we can assist with the implementation of any structuring requirements.
The Financial Landscape for Long-Term UK Expats
For British nationals living overseas, maintaining non-UK resident status has traditionally provided key advantages, ensuring that only UK-sourced income is subject to UK tax. However, recent fiscal policies suggest a more stringent approach to tax residency, offshore structures, and overseas income reporting. The UK government is increasingly focusing on expatriates with financial ties to the UK, particularly those who:
Retain UK property or business interests.
Generate income from UK-based investments.
Are considering returning to the UK in the future.
While UK non-residents are generally only taxed on UK-source income, there may still be exposure to certain inheritance tax (IHT) and capital gains tax (CGT) liabilities. These considerations highlight the need for long-term expats to review their financial structures in consultation with a tax adviser, periodically.
Case Study: A UK Expat in the UAE
Consider a UK expatriate who has been residing in the UAE for over ten years. He owns shares in a UAE-based company valued at £10 million and maintains Swiss bank accounts holding £3 million. For some time, he had been considering placing these assets into a Jersey trust to enhance asset protection and facilitate smooth succession planning for his heirs. However, due to him being considered UK domiciled by birth (even though he was not UK resident) he was previously deterred by the potential 20% tax charge associated with such a transfer.
Under recent legislative changes, assuming he has no intention to return to the UK in the foreseeable future, he is now able to implement this structuring without incurring the prohibitive tax charge (due to residency being the key factor now rather than domicile), providing a unique opportunity to safeguard his assets. By working alongside a tax adviser, he can ensure that the transition aligns with both UK and international tax laws while benefiting from the robust legal framework of Jersey’s trust structures.
This case underscores the importance of professional advice in structuring financial affairs efficiently. While Jersey offers attractive solutions, every individual’s circumstances are unique, and obtaining bespoke tax and legal guidance is essential before proceeding with any structuring decisions.
How Jersey Trusts and Corporate Structures Can Assist
1. Wealth Preservation & Succession Planning
Trust Structures: Jersey trusts provide a framework for asset protection and estate planning, offering a flexible structured approach to wealth management.
Probate Considerations: Jersey does not impose IHT [1], and if a suitable Jersey Will is in place, the ability to transfer Jersey company shares to heirs can be achieved efficiently.
Long-Term Planning: Trusts allow expats to consolidate global assets and ensure smooth intergenerational wealth transfers.
2. Corporate Structuring through Jersey Companies
For UK expats involved in international business or investments, establishing a Jersey company can offer structuring advantages:
Legal Certainty: A well-established legal framework ensures compliance with international financial regulations.
Flexibility: Companies can provide a means of structuring wealth in a manner that meets both personal and regulatory requirements.
The Importance of Professional Advice
Given the complexity of tax laws and the potential implications of structuring decisions, it is crucial for long-term UK expatriates to take the following steps:
Consult a Tax Adviser: Before making any structuring decisions, seek expert tax advice to ensure compliance with both UK and relevant international tax laws.
Review Current Arrangements: Evaluate whether existing structures remain effective under the latest UK tax rules and consider any impact of potential changes being anticipated by the family (i.e. move of jurisdiction for UBO or their family).
Stay Informed: Regularly review legislative changes that may impact expatriate tax status and financial planning and, where appropriate, take advantage of any opportunities that may arise therefrom.
Why Jersey?
Jersey is recognised as a leading international finance centre, offering political stability, strong regulatory oversight, and a well-established legal system. It provides UK expatriates with:
A structured environment for managing international assets.
A jurisdiction with a clear and transparent regulatory framework.
Expert fiduciary, legal and wealth management services.
Conclusion
With evolving UK tax policies, long-term British expatriates should ensure that their financial affairs are structured efficiently, in compliance with relevant laws and make the most of any new opportunities that arise from these changes in policy. All structuring decisions should be made in consultation with a tax adviser to ensure they align with individual circumstances and applicable tax regulations.
Here at Fiduchi we are happy to facilitate introductions to tax advisers to help expatriates navigate these complexities effectively, support the implementation of any appropriate structuring solutions that are recommended and build a long-standing relationship to help with the transition of wealth in the future years.
For more information, or to discuss how Fiduchi can assist you, please contact Heidi Thompson, Christopher Dungan or Graham Marsh TEP.
[1] Jersey does impose a probate charge, although this is typically deemed a minimal administrative charge rather than being prohibitive. Please contact us for more information.